We analyze the rise and decline of the steel and mining industries in the regionsof Saarland, Lorraine und Luxemburg over a long period, from the mid-19th century to 2003.Our main focus in on the period of structural decline in these industries after the secondworld war. Dierences in the institutional framework of these regions are exploited to analyzehow the broader scal constitution sets incentives for governments to either obstruct or toencourage structural change in the private sector.[...]